Unilever makes play for online razor market with $1bn acquisition of Dollar Shave Club

Unilever has acquired male grooming subscription service Dollar Shave Club (DSC), in a move that will see it go head-to-head with arch-rival Procter & Gamble's market-leading razor brand Gillette.

The FMCG giant is paying a reported $1bn for the five-year-old startup, which delivers a choice of razors and shaving products for a regular monthly charge. It is currently only available in the US, Australia and Canada, but having the backing of Unilever is likely to accelerate its expansion to other markets.

Dollar Shave Club will continue to operate as an independent entity, run by chief executive and founder Michael Dubin.

In a statement, Dubin said: "DSC couldn’t be happier to have the world’s most innovative and progressive consumer-product company in our corner. We have long admired Unilever’s purpose-driven business leadership and its category expertise is unmatched. We are excited to be part of the family."

The acquisition is not quite Unilever’s first dabble in the shaving category; in 2013 it launched the Axe razor in the US, a rebranded version of a product from Schick, the brand sold in the UK as Wilkinson Sword.

But bringing DSC into the stable sends a much more significant statement of intent to its long-term rival in the world of personal care products. The price tag represented a bargain, said tech analyst Ben Thompson in a blog post, when compared to the $57bn P&G forked out for Gillette just 11 years ago, and the $10bn P&G spent on advertising its brands in 2014 alone.

Razing the stakes

While Gillette remains the world’s biggest razor brand by a wide margin, P&G was slow to respond to the growth of shaving subscription services, only launching its own offering, Gillette Club, last summer in the US. By September it had 21 per cent of the US subscription market, compared to 54 pc for DSC.

Gillette Club launched in the UK in April with a mafia-inspired campaign (below). It competes in the market with brands including Bearded Colonel, King of Shaves, Cornerstone and Close Shave Society.

Last December, P&G sued DSC for violating its intellectual property, claiming DSC had used its patented technology without authorisation. It was the latest episode in a feisty rivalry extending back to 2012, when DSC released a hugely popular viral ad written by and starring Michael Dubin himself.

Without naming Gillette, Dubin asked: "Do you like spending $20 a month on brand name razors? 19 go to Roger Federer." Gillette was a longtime sponsor of the Swiss tennis champion, though they parted ways last year.